A stock is trading at $51. You believe there is a 60% chance the price of...
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A stock is trading at $51. You believe there is a 60% chance the price of the stock will increase by 15% over the next 3 months. You believe there is a 20% chance the stock will drop by 5%, and you think there is only a 20% chance of a major drop in price of 25%. At-the-money 3-month puts are available at a cost of $660 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months? A stock is trading at $51. You believe there is a 60% chance the price of the stock will increase by 15% over the next 3 months. You believe there is a 20% chance the stock will drop by 5%, and you think there is only a 20% chance of a major drop in price of 25%. At-the-money 3-month puts are available at a cost of $660 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861704
11th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Posted Date:
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